Smith acknowledged that everyone wants to better their condition. At one point he even seems to imply that everyone places higher priority on improving their relative position in society than on achieving an easier and more pleasurable life (TMS: 50). (My grandmother, whose life became easier and more pleasurable in the 1950s after she obtained her first refrigerator and washing machine, might have thought that comment to suggest that Smith was not sufficiently aware that he lived a privileged life. But I digress!)

Smith also makes the point that individuals should be responsible for looking after their own interests: ‘Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so’ (TMS: 82). (I think Smith makes a stronger case for individual freedom here than who make the dubious claim that each individual is always the best judge of his or her own interests. But I digress again!)

Impartial spectators condemn violations of fair play among individuals competing to better themselves:

Smith’s ethics is based on the simple proposition that when individuals reflect upon their own past actions from the viewpoint of an impartial spectator they feel remorse when they have acted unjustly. His response to critics who suggested that he was reducing the principles of ethics to popular culture was that while children might seek to be universally agreeable, mature people who have important interests to manage find that they cannot please everyone. While some people might be content to follow popular culture, those who are morally responsible and fitted for public life have to establish their own impartial spectators as a judges in their own minds (Phillipson, p164-165).

However, I don’t think it is particularly useful to try to think about development of identity and character outside the context of social interactions that reward particular behaviours and penalize others. It seems to me to be a fact of life that a person who identifies strongly as a member of a small community and has limited social interactions outside that community is less likely to feel conscience-stricken if he or she acts unjustly towards a stranger than towards another community member. The ethics of respect for the rights of strangers is no doubt encouraged to some extent by abstract ideals that would be endorsed by impartial spectators, but is likely to be more strongly encouraged by mutually beneficial commerce which offers ongoing rewards for ongoing cooperation between strangers.

Estate tax is nothing but another tax on savings and investments which are already under heavy taxation – income is taxed when it is earned, interest derived from investments and savings is taxed, appreciated value of an asset is taxed (capital gains tax).

A study by well-known economists Henry Aaron and Alicia Munnell concluded that estate taxes are unfair, raise little revenue, impose excess burdens, and have failed to achieve their intended purposes.

Estate taxes reduce the amount of capital available in the economy and thereby reduce the wealth ultimately available to the society. It encourages consumption and discourages savings. It reduces the after-tax return on investment. This causes the capital stock growth to decrease. Capital is vital to economic growth. Estate taxes impede the accumulation of capital. This has a negative impact on economic growth.

Estate tax liquidates and transfers to government control privately held assets which could otherwise be used for maximizing economic efficiency. Instead they are transferred to consumption-intensive government uses.

Estate taxes discourage entrepreneurial activity, hinders entry into self-employment, and breaks up family-owned businesses – a critical component of the U.S. economy. For people of lower income households to move to higher income groups, entrepreneurship is the key. Estate tax prevents upward income mobility by disrupting the transmission of a family business to succeeding generations.

Studies have shown that the estate tax continues to be a primary reason why small businesses fail to survive beyond one generation. Many heirs have cited the need to raise funds to pay estate taxes as the reason why their family business failed. Planning for estate taxes reduces the resources available for investment and employment. Business owners tend to keep liquid assets available to pay off future estate taxes. Estate tax imposes large cash demands on family businesses that generally have limited access to liquid assets.

In a tax system that is fair, individuals with fewer resources pay less taxes than those with greater resources, and all taxpayers with the same amount of resources pay the same tax. However, the rich can afford to use various estate planning options to reduce or avoid estate taxes, and the poor who cannot afford estate planning end up paying more. There are many tax avoidance options available to the general public. To avoid estate taxes, capital owners shift resources from their most productive uses into less efficient but more tax-friendly uses.

Estate tax is extremely primitive and can result in inefficient allocation of resources. The maximum rate for estate tax is presently 45%. It discourages savings and investments and lowers the after-tax return on investments. Estate tax violates the basic principles of an efficient tax system.